More Bay Area homeowners owe more than their homes are worth than did last year, according to a new report from the real estate website Zillow. Analysts say the increase shows continued weakness in the housing sector. We discuss the report, and what it means for homeowners and the overall economy.

Rick Turley, president of Coldwell Banker of the San Francisco Bay Area
Carolyn Said, staff writer covering mortgages and the real estate market for The San Francisco Chronicle
Amy Bohutinsky, chief marketing officer for Zillow
Atif Mian, associate professor of finance and real estate at UC Berkeley's Haas School of Business
Paul Winders, real estate broker with Around Town Realty in Vallejo

  • Rufus

    We are still in a housing bubble, both nationally and in many places around the US. While talking heads on MSBNC and whatnot act like higher prices are a good thing, the truth is that every bubble is an aberration that will pop eventually, not matter how much the Wall St fraudsters and their bought politicians try to prop it up.

    • Rufus

      We are still in a housing bubble, mainly in wealthy regions like the Bay Area but the national average also is still too high. While talking heads on MSBNC and whatnot continually act like higher
      prices are a good thing, the truth is that every bubble is an aberration
      that will pop eventually, no matter how much the Wall St fraudsters
      and their bought politicians try to prop it up and prolong it.

  • guest

    Two homes in our neighborhood sold in the last month for over 1 million. We don’t live in a fancy neighborhood but it is near the tech industry which is hiring. People are still willing to spend top dollar for homes in the right location.

  • Vince

    I’ve been very disappointed in the banks with regards to my mortgage. I lost my job a few years ago when the company went bankrupt. I have been able to maintain an excellent credit rating and have never been late on a mortgage payment. I talked to my bank about refinancing at a lower interest rate, and because the home is “under water” they will not issue a new loan for more than the property is worth. My excellent history with them doesn’t even count. I didn’t even ask for a lowering of the principal, just a better interest rate. I fell like I’m being punished for being a good borrower. They know I do not want to hurt my credit rating and I am a sucker who will continue to pay them too much. So much for working hard to maintain a good credit rating. I should have stopped paying them for a while and then ask for help. 

    • Sasuansi

      We are in a similar situation with a slight difference. Found out the hard way that we are punished for being a good borrower. Bought our home during the bubble time in late 2005 with a fixed rate. Home is underwater now by 200K. When we inquired with our primary lender (IndyMac, now OneWest) whether we would be eligible for any of the refi/modification programs,they said our loan is neither Fannie Mae or Freddie Mac so we are not eligible under the HOPE program and also since we have been paying regularly and not defaulting we will not be considered for modification, and perhaps if our financial situation changes (meaning one of us lost job) we may be considered as “under hardship” conditions. We were asking for better interest rate only as nearly 50% of our household income was going towards the housing payment and w ehave two kids to maintain. Sure enough after few months, my spouse lost job, and when I called OneWest for assistance “under hardship”, they kept transfering me to their Collection Department without any consideration or discussion. It was very frustrating. Fortunately, my spouse was able to find a job in few months, so we are continuing making the payments without much difficulty. But I am afraid that in this economy if one of us were to lose job again, we can’t make the house payment. But if we default, it is a gain for One West as the house value is either equal or higher than their loan to us as the 2nd mortgage lender will be the one losing. In re-evaluating this situation, I found out that when I first contacted One West late last year, we were eligible for FHA re-fi as my home value was equal to the total loan!! They purposely cheated us saying that i have no options to reduce the monthly payment.. 

  • Azim

    Can we get some help from our local politicians who can work with the bank so we cna refi our loans?
    This will help lower the payments so we cna put the savings back in the economy.

  • Chemist151

    How about including a new coverage policy required by banks on home loans so the insurance would cover the issue if the owner is not able to continue payments?  Could new insurance policy cover any of these issue?  If they’re underwater and can continue payments then it’s their issue but non-payment.

    It should be in the interest to refinance to lower interest rates when possible even if underwater.  Can’t we grandfather a refinance on good faith without doing a 80-20 loan for underwater mortgages?

  • Hessrick

    My question regards San Francisco Tenancy-In-Common (TIC) Financing. Why is it so difficult to find competitive TIC mortgage rates? We are part of a 5-unit Russian Hill TIC with ~50 equity ($1.2M owed on a $2.5M property), but the best mortgage rate we can find is ~7.5%. Thanks, Rick

  • Rita Rhine

    I am not underwater, but trying to finish up a FHA loan and cannot get our HOA to respond to the docs the bank is asking for. I have been in this process for over a year. I have in escrow another home and they are going to charge me $100 day until I get this money from our FHA loan that we have qualifed for.

  • Uncentavo

    What about options for folks who are paying interest only loans at high rates 8.75% and 6.75% with only 10%.? It seems as if life changing events are the only negotiable aspect and if you are lucky enough to remain married and employed, you are stuck with your awful rates.

  • Alejandro in Santa Clara

    What does it mean to short sell? Consequences? My house was bought at $580k and now comparables in our community are going for around $430-$450k. Over $100k loss. I don’t foresee it going back to those numbers. In my mind the wise choice is to cut my losses now because it will still be under in 3-5 years if not longer. Thoughts?

    • sunken

      I’m not an expert, but going through this process soon.  Here’s what I’ve learned from a real estate lawyer, and is consistent with what my short sale agent says as well.  A short sale means that the house is sold for less than the mortgage owed to the bank, and the seller does not want to make up the difference so that the bank takes a loss.  Then, the bank(s) has to participate as a selling party as well, in addition to the seller.  The difference (or loss) taken by the bank is considered a forgiven debt to the seller, and the seller is responsible for paying income taxes on it.  However, the debt forgiveness act pardons the seller from having to pay this income tax (up to a certain amount), which is set to expire Dec 31, 2012.  Our house would probably sell for $150k less than what we owe.  We want to move now, and don’t have enough money to pay the difference, so we’re opting for a short sale.

  • Bayln

    please tell me the reasons why someone would rather do a short sale then a foreclosure.
    thank you

  • Fay

    I owe one-hundred thousand in student loans. I am unemployed, so one
    might say I am “underwater”. Why then, in home ownership, does being
    underwater matter if one plans to live in the house for the next twenty
    to thirty years? Cars depreciate too – they become worth less than what
    was paid.

    The real estate pie-in-the-sky salespeople seem to think that house
    prices only go up. Stocks rise and fall so why wouldnt market values
    rise and fall in real estate as well? So why the hyper-anxiety over how
    much the house can sell for?

    Fay – a renter-
    The City

    • John

      The reason for the anxiety is not the value of home.  It is the refinancing part.  Most of home owners have interest only loans fixed for 5 to 15 years.  When interest adjust, they are not able to pay their mortgages. 
      Then the banks force you out of your home with foreclosure proceedings. 

  • John

    Banks do not want to work with the loans that are not Fannie May or Freddie Mac.  I have one of these loans.  I cannot refinance it even with a good credit due to LTV ratio.  What other options do I have?

  • Gil Woodring

    I currently have a home in Utah County, Utah, which was purchased for primary residence back in 2007. The short story is, I needed to move back to the Bay Area in order to keep my job. I lived in the house for 1.5 years, and it is now rented, although I can’t rent it for what the mortgage payment is. WFB refuses to work with me because it is now an “investment” property. I would like to explore the option of a short sale and understand there is a tax forgiveness option available which expires in 2012.  Does anyone know the name of this tax forgiveness program?

  • Fay

    My sister is hoping to re-fi and gets nowhere with the lender. It is ludicrous that one must default to try for modification. The banks are getting away with playing possum while Rome burns (to mix metaphors). Where are the legislative teeth to compel lenders to actually ANSWER requests?

  • rjz707

    Just returned from Las Vegas, where i went 12 years ago to buy “fixers”. As a contractor, it seemed like a good plan. Cannot tell you how “wrong” that was. I,ve seen how it works and it is vile to hard working Americans. (Anyone remember when the mortagage companies were allowed to call you 10 times a day tobeg you to take money?) The banks have raped us with the consent of the govn. We need help for PTSD, that’s what we need. I can tell you how it really doesn’t work and how once again, we got duped.

    • guest

      Yes, the bank was calling me every 10 minutes to try to get me to take out a HELOC. I agree that predatory lending was a big problem and it isn’t going away. The Republicans have decided they won’t support a reform that would legally require a bank to verify that the borrower can actually afford the loan.

  • Ron

    Not buying that Contra Costa has seen true improvement.
    County assessor just appraised our home @ 8% higher than last year.
    And yet: based on Zillow charts, homes in our zip and city and county all trending down. Also, slightly larger home 2 doors down sold very low (way less than our County appraisal) in May. Its a comp, and our Zillow estimate dropped 12.5% when that happened!
    Is Zillow perfect? No. But this County Assessor number stinks to high heaven.
    This looks like a revenue enhancement scheme, not a legitimate appraisal – and I’m being far too diplomatic here.

  • Kay

    I was just happy to hear Sydnie’s voice! Hooray, you’re back in the mix! I listen to NPR everyday and now it’s better because of you.

  • Steve

    Reference was made in this program to two bills currently working their way through the legislature.  These bills would effect lienholder rights vis a vis a deficency judgment.  One was “SB” something or other and the other one, I can’t remember even that much.  Anyone have specific information regarding either of these bills, SB numbers or such, that might allow me to look’em up?  Thanks!   

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